Portfolio management fees - Stocktrades Canada

A friend has sold her house and has a $400,000 nest egg to invest. She is very nervous about losses and wants to go with an investment advisor like IG and a “conservative” approach to things. Can you pls tell me what these firms typically charge for fees? She’s being quoted 1.5% annual fee, which seems to me to be excessive ($6,000/yr) , given that the advisor’s plan is to simply “park” her money in 3 different Mackenzie mutual funds. Any advice or anecdotal stories would be much appreciated. Thanks.

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Asked on July 13, 2021 8:35 am

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Private answer

1.5% is a pretty typical fee. These investment advisors and firms are certainly not cheap, and they've often been criticized for collecting these fees while doing very minimal.

It is a give and take proposition. If someone is very nervous about losses, what if the market crashed 25% and her $400k went to $300k and she panic sold? That's a $100,000 loss, far more significant than paying someone $6000 a year.

Investing is very easy while the market is going up. It's when things get rocky. Crashes and corrections will always happen. What you do during those times is what will make or break you. And to someone who is excessively nervous about losses, it could result in panic selling. An advisor somewhat limits this, as they can provide general direction and manage the account.

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Posted by Dan Kent

Answered on July 13, 2021 10:19 am

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